Corporate Governance

Electing multiple Outside Directors is a basic policy of the Daicel Group. By electing Outside Directors, who now comprise a majority of the Board of Directors, and considering their opinions and advice as informed by their diverse expertise, Daicel is working to bolster the oversight functions and appropriateness of management decisions made by the Board of Directors. Moreover, our Executive Officer system has enabled us to clearly separate our decision-making/supervisory functions from our business execution functions, allowing for a dynamic business execution structure that allows us to quickly respond to changes in the management environment.

Through this governance structure, we strive to consistently improve corporate value with all reasonable considerations made for our stakeholders.

The Company recognizes the role of the Board of Directors as follows: setting the direction we should aim for, creating a concrete business strategy toward the target, and supervising the execution of business and business operations from an objective point of view. The Board is made up of five Inside Directors and six Outside Directors (nine men and two women) to ensure the effectiveness of this role. Inside Directors have profound insights into our businesses, while Outside Directors have a wealth of experience in business management and diverse expertise. Of the six Outside Directors, five satisfy the “Standards for Independence of Outside Directors/Outside Audit & Supervisory Board Members” as defined by the Company. Therefore, we organize the Board of Directors in a way that allows the Outside Directors, who are in a majority on the Board of Directors, to state their opinions to the Company’s management from an objective Directors’ point of view.

The Board of Directors is, in principle, held once a month to make decisions on important management matters and to supervise the execution of duties and business operations. In addition to the Directors, all five Audit & Supervisory Board Members, including three Outside Members, attend the meetings and provide opinions as necessary. The position of Chairperson of the Board of Directors is held by the Chairperson of the Board.

The term of office for Daicel’s Directors is one year. This short term of office enables Daicel shareholders to increase their involvement in the appointment of Directors. At the same time, it allows the Company to better clarify the management responsibilities of its Directors and thereby strengthen its corporate governance.

It is necessary for each Director to develop his/her knowledge of our business to ensure effective supervision of the execution of business. Therefore, we provide opportunities for mainly Outside Directors and Outside Audit & Supervisory Board Members to tour our manufacturing sites and provide an explanation of Daicel’s departments, products and technologies as well as the Board of Directors’ meetings.

The activities of the Board of Directors are as follows.

Number of Board of Directors meetings in FY2026/3: 15

The number of resolutions, discussions, and reports at Board of Directors meeting was as follows.

FY2026/3 Board of Directors Summary of Major Resolutions, Discussions, and Reports Related to Governance and Compliance

The Audit & Supervisory Board comprises five members (four men and one woman), and a majority, three members, are independent Outside Audit & Supervisory Board Members that meet the standards for independence of Outside Directors and Outside Audit & Supervisory Board Members. Outside Audit & Supervisory Board Members possess extensive experience in accounting, legal affairs, and other disciplines, as well as broad insight into fields such as corporate governance, business ethics, and sustainability management and fulfill auditing functions from a third-party, independent standpoint.

The Audit & Supervisory Board holds meetings to share information, deliberate on, and make decisions about important issues related to the Company’s audits. It also regularly attends Board of Directors meetings and important internal meetings held by Standing Audit & Supervisory Board Members and regularly meets with the Representative Director, Outside Directors, and External Auditors. In addition, it works to improve auditing effectiveness through such means as communicating with the Internal Audit Department’s Auditing Division, etc. when needed.

The activities of the Audit & Supervisory Board Members are as follows.

With respect to Key Audit Matters (KAM), along with attending regular meetings and gatherings with External Auditors to confirm brainstorming progress, the Audit & Supervisory Board communicate important information to the executive team as needed.

The Nomination and Compensation Committee, which is chaired by an Outside Director and consists of Outside Directors, who are the majority of the Board of Directors, the Chairperson of the Board, and Representative Directors, reports on the personnel and remuneration of Directors, Executive Officers and other officers, in response to requests from the Chairperson of the Board of Directors or the Chairperson of the Audit & Supervisory Board, from the point of view of ensuring objectivity, transparency, and validity in the process of making decision.

The Nomination and Compensation Committee is administered in line with the regulations for the Nomination and Compensation Committee. This committee has the authority to state its opinions in response to requests from the Chairperson of the Board of Directors regarding decisions on candidates for Directors and the Audit & Supervisory Board Members, the appointment of Executive Officers, etc. and the compensation assessment process of Directors and Audit & Supervisory Board Members. The Chairperson of the Board of Directors must report the response of the Nomination and Compensation Committee in the Board of Directors meetings regarding decisions on candidates for Directors and Audit & Supervisory Board Members and the decisions on compensation for Directors and Audit & Supervisory Board Members. The Board of Directors meets to make decisions concerning these topics in consideration of responses from the Nomination and Compensation Committee.

The activities of the Nomination and Compensation Committee are as follows.

The number of meetings of the Nomination and Compensation Committee in FY2026/3: 9
The number of Committee agenda items are as follows.

The Company has an Executive Officer System in order to clearly delineate decision-making and supervisory functions from business execution functions and further energize corporate management through swift decision-making.

The Company’s 21 Executive Officers (four of whom are also Directors) execute operations as heads of SBUs, sites, or corporate divisions or as Presidents of Group companies.

In accordance with the Rules Concerning Circulars (rules relating to job functions) these Executive Officers are given a certain measure of decision-making authority that they exercise to make swift decisions after accurately assessing business opportunities. Certain committees have an Executive Officer nominated by the President and CEO to serve as Chairperson in overseeing efforts to develop driven, responsible managers that will achieve the aims of the medium-term strategy and long-term vision of the Company.

These Executive Officers report important matters concerning business execution at monthly Board of Directors meetings and take advice from Directors and Audit & Supervisory Board Members to serve in supervising the Board of Directors.

In the course of the President and CEO carrying out basic policies on corporate management as determined by the Board of Directors, the Management Meetings holds discussions and makes decisions about important business plans and business execution plans, as well as individual business operation execution.

Generally meeting twice a month, the committee consists of the President and CEO as well as Directors (excluding Outside Directors) and Executive Officers nominated by the President and CEO. The committee also has two Standing Audit & Supervisory Board Member who give their views on matters when needed.

The committee reports on the progress and results of its proceedings at monthly Board of Directors meetings and takes advice from Directors and Audit & Supervisory Board Members to serve in supervising the Board of Directors.

Every year, Daicel conducts and publicly releases a summary of an effectiveness evaluation of the Board of Directors, which aims to maintain and improve the Board’s performance and find the most suitable approach to corporate governance.

Based on the FY2025/3 effectiveness evaluation, we pursued various initiatives in FY2026/3 to help further enhance the quality of discussion in the Board of Directors. These initiatives included allocating time for the discussion of reports on the implementation of management strategies, progress on sustainability, and human-capital-related initiatives, and also a review of the ideal form of board materials to facilitate effective discussion. Furthermore, in FY2026/3, we also focused on discussions regarding the formulation of a new mid-term management strategy. 

Daicel has established an Auditing Division, Corporate Compliance Program, and Safety and Quality Auditing Division as internal audit units and works to enhance the effectiveness of audits while communicating with Audit & Supervisory Board Members as appropriate.

In nominating and appointing Directors, Audit & Supervisory Board Members, and management executives such as Executive Officers, the Daicel seeks individuals with the right personality, knowledge, motivation, ethical stance and management perspectives for leading the Company and who meet the basic criteria of supporting and upholding the Daicel Group’s Basic Philosophy, Sustainable Management Policy, the Daicel Group Code of Conduct, and the Ethical Standards of Daicel Group, and who possess the necessary credentials and experience for enhancing Daicel’s medium- and long-term corporate value. The Board of Directors decides on nominations and appointments based on the advice of the Nomination and Compensation Committee.

Daicel has declared its support for the Challenge Initiatives for 30% of executives^* to be women by 2030 (#Here We Go 203030), sponsored by Keidanren. Daicel has positioned Diversity, Equity and Inclusion (DE&I) as a key materiality. The Company will seek to further enhance our corporate value by combining the power of diverse human resources, including women.

Daicel appoints its Outside Directors in accordance with its own Standards for Independence of Outside Directors/Outside Audit & Supervisory Board Members, which, in principle, require that Outside Directors be sufficiently independent and present no risk of conflicts of interest with general shareholders. Daicel also designates all Outside Directors who satisfy the independence criteria as independent Directors.

For the purpose of ensuring the soundness of the stock compensation system for Directors, under the Restricted Stock Compensation System, the Company has established a provision to confiscate all or part of the stock-compensation before or after the lifting of the transfer restriction at the discretion of the Board of Directors in the event of a certain reason such as an unlawful act.
Also, under the Performance-based Stock Compensation Plan, the eligible recipients are not granted the right to receive shares at the discretion of the Board of Directors in the event of a certain reason such as an unlawful act before the vesting date.

Directors and Audit & Supervisory Board Members attend external seminars and training sessions in order to accomplish such things as acquiring the knowledge necessary for the performance of their duties and work tasks, as well as to update their skills. The Company bears the costs of these activities.

It also provides annual compliance training for Directors, Audit & Supervisory Board Members, Executive Officers, and other employees such as senior employees (excluding Outside Directors).

In addition, we provide opportunities for Outside Directors to tour our manufacturing sites and receive an explanation of Daicel’s business activities so they can better understand our business and utilize their knowledge in discussions at Board of Directors meetings.

In FY2026/3, we conducted activities such as executive training on corporate ethics, explained the business of the Intellectual Property Center, R&D Headquarters, and Smart SBU, reported on our sustainability activities and shared initiatives to promote the participation of women.

Daicel develops and manages a system of internal controls under its Basic Policy for Structuring the Internal Control System to ensure the appropriateness of its business operations as stipulated under Japan’s Companies Act.

Furthermore, Daicel has established the Internal Control Council, chaired by a senior managing executive officer, who concurrently serves as the general manager of the Corporate Support Headquarters and comprising general managers of corporate departments as members, to accurately grasp the status of the establishment and management of these systems and to discuss related measures toward ultimately ensuring the effectiveness of internal controls throughout the Group.

Standing Audit & Supervisory Board Members also attend meetings held by the council as observers. The council provides a report on its activities to the Audit & Supervisory Board and Board of Directors, and the Board of Directors has confirmed that the Basic Policy is being implemented appropriately.

Daicel only adheres to a shareholding policy insofar as it is judged to contribute to the improvement of the medium- and long-term corporate value of the Daicel Group from the perspectives of, for example, strengthening business relationships, maintaining the stability of transactions with financial institutions, and maintaining or strengthening cooperative business relationships.

When any stocks do not meet the purpose of our possession or are not recognized as being economically rational due to changes in the business environment or other factors, we will reduce them accordingly.

We regularly review the purpose and appropriateness of all stocks we hold, as well as the quantitative and qualitative benefits of our business transactions and the economic practicality of the risk of such transactions. The results of these reviews are reported to the Board of Directors, which examines their content.

In line with the above-mentioned policy, in FY2026/3 the Company sold all the shares of five securities and some shares of one security out of 14 listed securities held by the Company. As of the end of FY2026/3, the Company held 36 stocks for a balance sheet amount of ¥36.0 billion. Although the rise in share prices has increased the market value of shares, the Company proceeded with the sale of the strategic shareholdings as planned. This resulted in a decrease in the amount recorded on the balance sheet.

In light of various circumstances that include the impact on the market and the financial strategies of the issuing entity, the Company plans to sell any stock that fails to satisfy our purpose for shareholding or that is deemed to be no longer economically practical due to factors that include changes in the business environment.

The balance of cross-shareholdings not including deemed holdings of shares and cross-shareholdings including deemed holdings of shares as a proportion of consolidated net assets in the next Mid-Term Management Strategy is expected to be as shown below.

Daicel encourages fair evaluation of its corporate value by following its Disclosure Policy to foster accurate understanding of the Company among its stakeholders, including shareholders and investors. With the aim of building relationships of trust with all its stakeholders, Daicel has disclosed corporate information in a timely, impartial, accurate, and proactive manner on an ongoing basis. We also carry out IR activities to engage in dialogue with our shareholders and investors to further enhance our corporate value.

We have considered the Annual General Meeting of Shareholders as a valuable opportunity to engage with our shareholders. For this reason, Daicel posts the convocation notice for its Annual General Meeting of Shareholders on its website prior to distributing it by postal mail, aiming to provide shareholders with sufficient time to examine the agenda items. Moreover, to ensure that as many shareholders as possible exercise their voting rights, we offer voting alternatives via postal mail or the Internet, using computers, smartphones and other devices, for those who are unable to attend the meeting.

To facilitate further understanding of the initiatives of the Daicel Group, we are striving to provide easy-to-understand answers to questions voiced by shareholders.

At the Annual General Meeting of Shareholders held on June 20, 2025, we held the post-meeting reception, allowing for deeper dialogue between shareholders and the Company’s executives.

Under the supervision of the officer in charge of IR, the Company promotes IR activities in cooperation with the management team including the President and CEO, and related departments such as the IR department. In line with the aforementioned Basic Policy on Information Disclosure, Daicel adopts a proactive approach toward its IR activities.

By holding quarterly financial briefing sessions and things such as individual interviews, interviews at conferences sponsored by securities companies, and IR events, the Company strives to promote communication, aspiring to foster better understanding of the Daicel Group among institutional investors. In FY2026/3, we held a tour of the Fujii Plant of Polyplastics Co., Ltd. (currently the Fuji Plant of Daicel Corporation) as an opportunity to promote a better understanding of the Daicel Group's businesses.

We provide information to individual investors through our corporate website and strive to enhance its content so that they can understand the Daicel Group in an easier-to-understand manner. Furthermore, in FY2026/3, we also provided opportunities to deepen understanding of the Daicel Group and receive feedback by distributing a company profile video through a security company website and conducting web surveys targeting individual investors.

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The IR department informs management and related departments as needed about the content of dialogues with shareholders and investors, their opinions and requests, and the content of analyst reports. In addition, the Officer in charge of IR reports the dialogue to the Board of Directors, and the IR department reports it to the management team on a quarterly basis at the meetings, which is used in discussions aimed at improving our corporate value.